* European shares fall: STOXX 600 last down 0.2%
* Washington's Hong Kong bill spurs trade tensions again
* Virgin Money rallies on reassuring outlook
* Wall Street closed for Thanksgiving Day holiday Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: rm://email@example.com
BREXIT ELECTION: MARGINS MATTER (1504 GMT)
So far everything seems to be going in favour of UK markets, especially the domestically-exposed stocks and sterling, with Conservatives set for their biggest win since 1987. And that's exactly what markets need to keep up their momentum post elections.
Referring to the Stock Market Almanac, Jefferies notes that between 1945 and 2010, the Conservatives and Labour won nine general elections each. In eight out of the nine years, a Conservative victory delivered an average 10.8% gain (FT All Share) one year afterwards. The returns were -5.8% on average following a Labour victory.
That's history, and an old one.
More recently, in the past seven elections of which three were snap elections, UK gilts rallied on all seven occasions 3 months afterwards by an average 30.9 bps, while stocks suffered to put up a good show.
Is it going to be different this time?
Jefferies says: "It is not so much winning that will matter but the size of the majority – assuming a conservative victory. The market will place a high premium on the size of the majority given the impasse over Brexit."
TRADE WARS: JUST AN EXCUSE? (1445 GMT)
Last month the IMF highlighted once again how trade wars are to blame for the slowdown in global growth.
And while market action (closely tied to swings in mood surrounding talks between Beijing and Washington) appears to corroborate such view, not everyone believes that's totally true.
Take Patrick Artus, chief economist at French bank Natixis, who plainly says: "We do not believe the increase in US tariffs could be the cause of the slowdown in global growth".
His offers two counterarguments:
1. The global decline in demand for a number of products (cars, intermediate goods, capital goods) due to environmental constraints and the transformation of economies into service economies
2. The decline in Chinese imports, which is not linked to US tariffs but to the decline in demand for industrial products in China (cars, capital goods, metals...)
Artus points out that tariffs implemented by Trump ($117 bln) represent only 0.12% of global GDP and 0.6% of global trade, which he says "is surely insufficient to trigger a recession".
CONSUMERS TO KEEP THE EUROZONE ALIVE (1319 GMT)
It is that time of the year again: predictions season.
As we approach the last month of 2019, economists are busy writing outlooks for the year ahead. At S&P Global Ratings they think consumers will likely keep things going in the eurozone, which might register a 1% growth next year, according to a research published today.
"The strong labour market, rising wages, and low inflation will ensure that household consumption remains resilient," says S&P.
More on 2020 (by S&P):
- Trade tensions and the slowdown in the Chinese and US economies will continue to weigh on the industrial performance of the bloc - specially in Germany and Italy
- Low rates to give a boost to property prices
- France and Spain will outperform the eurozone thanks to their more services-led economies
- ECB is unlikely to end quantitative easing before 2021 or raise rates before 2022
CURING FOJI (THE FEAR OF JOINING IN) (1120 GMT)
We have to thank Exane strategists Dennis Jose, Jason Hart and Jeremy Gaudelier for reminding us that FOMO is not the only acronym in town but there's also FOJI, or the fear of joining in, which they say seems still to be plaguing investors.
But what's more, they say there are signs the market is starting to cure itself from FOJI and that a pick up in earnings could bring more fuel to the strong year-to-date rally.
"We think earnings growth could recover to 7% in 2020. And importantly, the ingredients for a new mini cycle in equities might be materialising," they say, noting that PMIs appear to have troughed and that stocks still look cheap vs. bonds.
"We have spotted nascent signs that investors have started transitioning to FOMO. This would be supportive", they add.
UK VOTE: ASSESSING THE IMPACT ON EU CAPITAL GOODS (0916 GMT)
Should investors worry about the impact of the upcoming Dec. 12 UK election on European capital goods companies?
Probably not too much.
JPMorgan has dune some number crunching and here are its main findings, based on expectations of a Conservative majority giving a boost to fiscal spending in 2020.
"We see fiscal easing in the UK having only a limited impact on our Capital Goods coverage with only ~6% of sector revenues generated in the UK and therefore we would expect little change to underlying demand expectations," analysts at the US bank say.
"For our UK Capital Goods coverage, moves in FX would likely have a bigger impact, though still not really significant," they add.
JPM sees a move in Sterling to the low $1.30s in the event of a Conservative win, with a move to $1.35 resulting in an average ~2% downgrade to its 2020 UK Capital Goods earnings.
OPENING SNAPSHOT: TRADE RISKS COME BACK (0838 GMT)
Risk-off: European stocks are off four-year highs this morning as Washington's Hong Kong bill rattles hopes for a truce in a 16-month long U.S.-China trade war.
Autos and technology are top sectoral fallers, down more than 0.5%.
London's FTSE 100 dips 0.5% as Vodafone and Johnson Matthey go ex-dividend and miners retreat from recent outperformance.
Among single stocks, Virgin Money has put up a great show, rising 18%, as a reassuring 2020 outlook offsets worries about dividend cancellation. Traders had called the shares sharply lower.
ON OUR RADAR: REMY, VIRGIN MONEY, TRADE-SENSITIVE SECTORS (0756 GMT)
Stock futures point to a slightly weak open for European bourses as Trump go-ahead for the Hong Kong bill dashed hopes of a trade truce between U.S. and China. Market activity today is likely to be subdued as the U.S. is closed for Thanksgiving.
In corporate news, Remy Cointreau missed an already lowered first-half profit expectation and that's seen pushing the French spirits group's shares 4% lower, according to traders.
Shares of Clydesdale and Yorkshire Bank owner Virgin Money is seen falling 2% to 3% after it suspended dividend and reported below-consensus profits.
Among UK small caps, Vitec, which supplies camera and lighting equipment, is seen opening down 15% after the company said unusually severe de-stocking is likely to hit 2019 results. Marine services provider James Fisher is called 3% to 5% down after weak profit outlook.
Dealers expect shares of infrastructure group Atlantia to take another hit today on chatter that Italy's PD may back Luigi Di Maio's proposal to revoke motorway concessions given to the firm.
No record high for Europe today? (0640 GMT)
European stocks are just a few points away from record high levels, but today may not be the day to achieve that feat as Trump's signature on the Hong Kong bill dashed hopes for a trade truce between the world's top two economies.
"Just when you think 'phase one' is in the bag...President Trump signed into law legislation that could bring diplomatic action and economic sanctions against Hong Kong," Chris Bailey, European strategist for Raymond James, says.
Financial spreadbetters IG expect London's FTSE to open 23 points lower at 7,407, Frankfurt's DAX to open 26 points lower at 13,261 and Paris' CAC to open 11 points lower at 5,916. U.S. Thanksgiving break is also expected to keep volumes subdued.
The pan-European STOXX 600 closed at 409.81 points on Wednesday, five points below its 2015 record high.
(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)